Understanding asset protection trusts

| Jul 31, 2018 | Uncategorized | 0 comments

Building an estate plan is not a simple process, especially in states like California, which carries more regulations and additional taxes than many others. Once a person begins looking into estate planning, they might easily get overwhelmed by the variety and complexity of the financial planning tools available.

This is perfectly reasonable. After all, estate planning professionals study the field for years and regularly review new laws and financial tools to make sure they maintain a clear, functional understanding of changing guidelines. While it is certainly possible for individuals to build their own estate plan without any guidance, the risks to doing so are enormous.

If you are considering building your own estate plan, you are on the right track. The sooner that you establish a plan and use estate planning tools to protect your assets and wishes, the sooner you can have peace of mind and know that you’ve done your part to keep your rights and assets secure.

Why use an asset protection trust?

Asset protection trusts provide very strong defensive options to a trust creator, allowing them to place assets in the trust to help avoid losing any of these assets to creditors or future creditors. In many instances, a trust creator may set up this kind of trust outside of the United States, but the trust creator does not necessarily need to transfer assets held within the trust to a foreign country.

Typically, such a trust exists for a defined amount of time, during which the trust creator has little control over assets within the trust. This separation can make it much easier to deal with potential creditors until the trust creator can resolve creditor conflicts. Then, the assets may transfer back to the ownership of the trust creator when the term ends and trust dissolves, assuming no creditors are still pursuing those assets.

Is an asset protection trust a good fit for you?

Without examining the specifics of your estate, your debt concerns and other financial priorities, it is difficult to assess how well an asset protection trust may serve your needs. However, if you do face significant threats to your assets by creditors, an asset protection trust may help you resolve this issue equitably while protecting your estate and your dignity. Take great care to consider all the tools available as you build your legacy and define your wishes for your estate and its future.